U.S., UK reach new post-Brexit deal on air services

WASHINGTON (Reuters) - The United States and Britain have reached a deal on a new open skies aviation agreement to govern air travel after the UK exits the European Union, the two governments said on Wednesday.

FILE PHOTO: A passenger plane is seen with the moon behind as it begins its final landing approach to Heathrow Airport in London, Britain, September 25, 2018. REUTERS/Toby Melville

The deal “will guarantee the continuation of the vital transatlantic routes used by tens of millions of passengers a year, ensuring people can continue to travel easily between the UK and US and maintaining choice and good value travel,” the British government said in a statement.

The biggest concern has been over post-Brexit bilateral rules that would require airlines to have substantial U.S. or British ownership. That posed a problem for British airlines with significant EU ownership.

The agreement will allow them to continue existing operations under the EU-U.S. open skies deal.

A U.S. State Department official confirmed late Wednesday it had completed talks on the agreement that will take effect after Brexit.

“The text meets the U.S. objectives of a smooth transition in the transatlantic aviation market post-Brexit and increased market access for U.S. carriers,” the official said.

In future, airlines that change hands will have to meet the ownership requirements or get U.S. approval, Reuters reported on Tuesday.

British-based carriers including British Airways, Virgin Atlantic [VA.UL] and Norwegian Air (NWC.OL) could have been negatively impacted without a deal.

IAG (ICAG.L), the Anglo-Spanish airline group that is the parent company of British Airways and Spain’s Iberia, has also been working to address EU ownership issues after the European Commission said it could fall below EU ownership requirements after Brexit.

Willie Walsh, IAG’s CEO, said in a statement that the “agreement is a significant positive development which we welcome.” He said it “facilitates strong competition and is clearly pro-consumer.”

Airlines for America, a trade group for major U.S. airlines, said the deal “provides the legal framework for the 20 million passengers and more than 900,000 tons of cargo flown between the two countries annually.”

Britain is in advanced talks for a bilateral air services arrangement with Canada and has also reached air services agreements with Albania, Georgia, Iceland, Israel, Kosovo, Montenegro, Morocco and Switzerland.